NEW YORK (AP) 鈥� The European Union approved Paramount’s this week, effectively clearing another regulatory hurdle for a mega merger that could vastly reshape the entertainment and media landscape worldwide.
But the greenlight comes with certain conditions.
The European Commission 鈥� which serves as the EU’s antitrust enforcer 鈥� said that even with a Paramount-Warner combo, enough competitors would exist across markets like film production and streaming in its 27-nation bloc. Still, when it comes to distributing movies to theaters, the Commission warned of high concentration that could lead to 鈥渨orse rental and distribution terms for cinema operators, ultimately disadvantaging consumers.鈥�
To address this, the Commission said Skydance-owned Paramount agreed to end its European Economic Area stake in United International Pictures 鈥� a longstanding venture with another major studio, Universal, that Paramount has used to distribute films in theaters outside North America. The company must end that partnership within 13 months of closing its Warner acquisition, the Commission said, and not enter any new agreements with Universal for the next 10 years.
Among other terms, current distribution of Warner films must be shifted to the same pipeline Paramount is using in these European countries. The European Commission said its approval was conditional on the company’s commitments and that it would monitor their implementation, without expanding further on how that would be enforced.
Paramount welcomed the EU’s greenlight, which it said represented 鈥渁 major milestone鈥� toward completing its acquisition. In a Wednesday statement, the company added that such clearances reflect how a Paramount-Warner combo 鈥渨ill enhance consumer choice鈥� and create a business with a scale 鈥渃apable of competing with the tech companies that have come to dominate the industry.鈥�
Universal did not respond Wednesday to a request for comment about Paramount’s new film distribution commitments in Europe.
A Paramount-Warner combo putting HBO Max, fan favorite titles like 鈥淗arry Potter鈥� and under the same roof with CBS, 鈥淭op Gun鈥� and the Paramount+ streaming service. Beyond movies and streaming, both American companies also own a handful of European-based TV assets 鈥� including Warner’s TVN Group in Poland, as well as localized channels for flagship Paramount brands like MTV and Nickelodeon.
Ongoing challenge from US states
The EU’s blessing marks the latest in a chain of regulatory clearances inching the merger closer to becoming a reality, but the deal faces other challenges. In the U.S., a federal judge on Monday ordered the companies to pause their transaction for .
That spans from a lawsuit brought forth by California and 11 other states seeking 鈥� on the grounds such a tie-up would 鈥渆xtinguish competition鈥� in Hollywood and lead to fewer choices for consumers, particularly moviegoers and cable customers in the U.S.
Paramount has called the states鈥� claims meritless. And the company reiterated that on Wednesday 鈥� saying findings from the EU’s approval 鈥渄irectly refute key assumptions that underpin the state AGs鈥� complaint,鈥� particularly when it comes to competition from newer or smaller film studios.
Either way, the deal is set to be halted until at least a preliminary injunction hearing, currently slated for Aug. 3. When granting the earlier this week, U.S. District Judge Araceli Mart铆nez-Olgu铆n said states had made a strong case about a combined Paramount-Warner鈥檚 potential to 鈥渟ubstantially lessen competition鈥� and that the merger would be 鈥渄ifficult, if not impossible, to unwind鈥� without a pause.
Other regulatory clearances
In contrast to the states’ case, the Trump administration’s U.S. Justice Department said it 鈥� and instead released a lengthy statement in support, maintaining a Paramount-Warner combo would bring “benefits for American consumers and workers.鈥�
Paramount says it’s also received regulatory clearances from countries like Australia, China and Canada. Other reviews remain in progress 鈥� including from the U.K., which has separately suggested it may intervene.
The clock is ticking. The company has pledged to start paying Warner shareholders added 鈥渢icking fee鈥� compensation amounting to about $7 million per day if the deal isn鈥檛 closed by Sept. 30.
Including debt, Paramount鈥檚 proposed purchase of Warner is valued at nearly $111 billion based on current outstanding shares.
Beyond central antitrust reviews, regulators in Europe have also effectively approved of the billions of dollars in financial backing Paramount has secured from three Gulf states: Saudi Arabia, Qatar and the United Arab Emirates. In regulatory filings, Paramount has maintained that these sovereign funds will not have any voting rights. Still, critics have sounded the alarm about what their money could mean in terms behind the scenes influence.
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